July 14, 2024
ASIC’s January activity hints at increased enforcement action

ASIC has issued a reminder to Australian financial services licensees (AFSLs) that new experience pathway obligations will come into force next Monday 1 July. 

From 1 July 2024, AFSLs are required to notify ASIC by lodging a notice where they have received a written declaration from a financial adviser who is eligible to access the experienced provider pathway.

Written declarations should be provided by the adviser to the AFSL “as soon as practicable” if they wish to access the pathway.

AFSLs have 30 business days to notify ASIC from the day they receive a written declaration. For written declarations received before 1 July 2024, licensees have 30 business days from 1 July. 

If the declaration is given after 1 July, they have 30 days from the date that they were given the declaration by the adviser. 

Notices can be lodged via ASIC through the ‘appoint’ and ‘maintain’ functions on the ASIC Connect system.

For relevant providers who wish to access the pathway but are self-licensed, they must notify ASIC themselves within 30 days of 1 July if the declaration was made before 1 July or within 30 business days if the declaration was made after that date. 

The corporate regulator flagged that the Financial Advisers Register (FAR) will not display whether an adviser is relying on the pathway.

Criminal and/or civil penalties may apply for failure to notify ASIC of a declaration within the required timeframes.

Last week, compliance experts warned there is potential for the experience pathway to be abused if licensees fail to check whether an individual has the necessary 10 years’ experience.

There is no requirement for them to check that the individual does indeed have 10 years of experience on the FAR. Nor is there a requirement for ASIC to check whether the adviser has been on the register for 10 years.

Speaking at a recent Holley Nethercote compliance session, partner Sam Hills said there is the potential for the experience pathway to be abused by dishonest individuals. 

“You would hope there aren’t unethical people, but if there is, then they could absolutely put their hand up and pretend,” she commented.

“There’s a risk an adviser could lie and be misleading and that would be a breach of the law and a licensee has an obligation to take reasonable steps to comply with the financial services law.”

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